Financial Statements & Ratio Analysis

Case Study: DEF Ltd$.$ has the following financial indicators:

o Debt$-$to$-$equity ratio: $2\mathrm{.}8$:$1$

o Return on assets $($ROA$)$: $5\%$

Required:

$3\mathrm{.}1$ Interpret these ratios and discuss the financial risks involved. $(5$ marks$)$

$3\mathrm{.}2$ Suggest corrective measures for improving financial stability.